Taking Stock

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New CEO Smith Doesn’t Take Long To Shakeup Delhaize 

You knew the explosion was coming, but you may not have figured it would happen this quickly. Beleaguered Delhaize America (DA), which operates approximately 40 Bottom Dollar Foods units in the Delaware Valley, has had a very difficult time of it the past two years. With Roland Smith, Delhaize America’s new CEO (he replaced the now retired Ron Hodge in October) now at the helm, the former foodservice executive didn’t wait long before blowing up key parts of the company’s senior management team.

Effective December 7 (a real day of infamy), Cathy Green Burns, who was president of DA’s large Food Lion unit, has left the organization and Beth Newlands Campbell has been named president of the Food Lion unit. Newlands Campbell was most recently president of DA’s Hannaford unit based in Scarborough, ME. She will relocate to Food Lion’s headquarters in Salisbury, NC and will now have responsibility for 1,127 Food Lion stores in 10 states, 73 Harveys units in Florida, Georgia and South Carolina and 11 Reid’s stores in South Carolina.

Additionally, Brad Wise, former senior VP-human resources for DelhaizeAmerica, was named president of Hannaford and Sweetbay. And Mark Doiron, veteran Hannaford executive, who since 2010 has served as chief supply chain officer for DA, has left the firm.

Smith, the former Wendy’s and Arby’s CEO, clearly has many challenges to tackle as the company has struggled with earnings and identical store sales, particularly at its large Food Lion unit, which comprises about 65 percent of Delhaize America’s sales.

The changes were first revealed in an internal memo sent by Smith on December 6. He noted that he was streamlining the organization to “provide clarity of responsibility and accountability for the newly formed Delhaize America Leadership Team (DALT).”

The memo also stated that “although it’s early in my tenure, I have had hundreds of significant and substantial conversations and interactions with trusted leaders across the organization. I mention this only to say that these decisions and moves were made with a great deal of input.” Smith writes that “through hours of one-on-one conversations, pages of written correspondence, and informal exchanges, I have explored both thoroughly and quickly what can be done to realize the potential of our business.”

Delhaize America is also creating a temporary strategic task force which will be responsible for developing a Delhaize America vision and strategy, clearly defining key critical priorities for 2013 and beyond, establishing operating principles and building the right structure throughout the organization to ensure and simplify accountability.

“The full composition of the strategic task force will be announced in the coming weeks,” Smith stated in his memo. However it is important to note at this time that Robert Canipe, who has served as Delhaize America CFO since 2010, has accepted a role with this group.”

Smith also says that a search has begun for an executive to fill the “chief people officer” position at Delhaize America.

In speaking of Cathy Green Burns, Smith stated: “Cathy has been a tireless and trusted DelhaizeAmerica associate for nearly 30 years, rising from a bagger in Bangor, ME, to the top leadership position of our largest banner. Along the way, she held senior leadership positions in merchandising, distribution and operations at both Hannaford and Food Lion before becoming chief operating officer at Food Lion from 2005 to 2010. She became the president of Food Lion in 2010. Cathy is known for her graceful, caring manner and broad understanding of the grocery industry. I appreciate her vast contributions to the organization and the lasting relationships she has built throughout her career.”

His comments about Doiron were: “Mark has dedicated his career to building Delhaize Americainto a world-class organization after starting with Hannaford in 1985. After serving as a category manager, Mark took on advanced leadership roles throughout Merchandising, achieving the position of executive VP, Hannaford merchandising, distribution and IT in 2008. Mark has served Delhaize America’s chief supply chain officer since 2010. Mark is known for his ability to understand large systems and build teams to support complex processes. His contributions across many years and many departments within the organization are appreciated.”
While Delhaize America has shifted to a modified centralization plan over the past two years, Smith clearly is considering further consolidation (perhaps DA’s new “centralized” model, partially created by Doiron that features a “Preferred Broker Network,” isn’t working that well).

Smith added: “I want to share with you my thinking on the question of whether we consolidate and/or relocate our corporate support services functions (formerly known as shared services). After a great deal of consideration regarding the future of our business, I have decided that centralizing these functions into one location is not a top priority at this time. That said, I and a vast majority of the leaders with whom I’ve spoken continue to believe that a central location for corporate support services is critical and necessary to strengthening our organization. However, there needs to be a demonstrable benefit to our business and our bottom line before implementing plans to consolidate corporate support services. Also, we need to stabilize our business and complete our reorganization plans before causing the significant disruption for associates that moving would entail and spending the millions of dollars necessary to facilitate such a major move. We will begin exploratory analysis about consolidating support services in late 2013 or early 2014. However, for the purposes of meeting our immediate needs, my intent is to relocate my team of direct reports and a select group of their key leaders to North Carolina. One notable exception is Brad Wise, who will lead Hannaford and Sweetbay from Maine.

“Over the next few weeks, my new team and I will focus on refining our business strategies and building the right structures to refocus, execute, and succeed. Similar to my personal entry into the organization, we intend to move quickly in making decisions and setting the right direction for Delhaize America so we can take action to improve our position in the marketplace. In that spirit, we are committed to communicating the next level of structural changes within the first six weeks of 2013,” Smith concluded. “I appreciate that this is a lot of complex and potentially emotional information to process. While it represents significant change for the organization, this work raises my confidence in the future of Delhaize America. I believe that this structure, team of talented leaders, and focus on clear priorities represents a solid foundation for future success. However, I firmly believe the success of Delhaize America will ultimately be driven by your continued hard work and commitment to excellence.”

Cathy Green Burns was at the forefront of Food Lion’s “rebranding” program which began in 2011. The repositioning effort was designed to upgrade Food Lion’s store base while also expanding perishables departments and offering a new private label brand to its consumers. About 75 percent of the stores have been upgraded to date with the remaining units (including those inDelaware,MarylandandPennsylvania) to be remodeled next year.

Other changes in the shakeup include the following personnel changes: Mike Vail, the former president of Delhaize’s Tampa, FL-based Sweetbay chain, was named chief supply chain officer for Delhaize America; Greg Amoroso, formerly senior VP for the business service center and sustainability, was named chief financial officer of Delhaize America; and David Criscione will assume the role of chief strategy and development officer, Delhaize America. He most recently was senior VP-strategy, marketing and business development, at Hannaford.
Despite results which several analysts have termed as mediocre, Bottom Dollar, which opened its first Del-Val store (King of Prussia, PA) in 2010 and has since expanded its geographic presence to the Pittsburgh-Youngstown market, there will be no management changes at the extreme value unit. Meg Ham will remain president.

Other senior level executives who will remain in their current positions include Linn Evans, senior VP-legal and government affairs for DA; and Deborah Dixson, who will remain chief information officer for DA.

Delhaize America, a unit of Brussels based Delhaize Group, has struggled with its bottom line and saw its 2011 profits and ID revenue drop.

Of course, there are those who believe that Delhaize America waited much too long to improve key aspects of its organization (especially price, service and selection at its dominant Food Lion banner) and that even a successful Bottom Dollar Foods won’t be nearly enough to offset the steepness of the mountain that DA will have to climb to be successful again. And when you throw in the challenges (new and diverse competition in New England and in theAlbany, NY market) that confront its long-time successful Hannaford unit, Smith faces one of the toughest turnaround tasks in the industry.